UJJAIN GENERAL TRADING SOCIETY PRVATE LIMITED Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THIS reference under S. 66(1) of the Indian IT Act, 1922, has been made by the Tribunal, Delhi, at the instance of the assessee, Ujjain General Trading Society (P.) Ltd., Gwalior. The question which has been referred to us for decision is :

(2.) THE Pilani Investment Corporation Ltd. (hereinafter referred to as the Pilani company) passed a resolution at its general meeting held on 18th Nov., 1958, declaring dividend on its shares in the following terms :

(3.) IN its return of income for the asst. year 1959 -60, the assessee -company showed Rs. 1,11,484.40 as its income from dividend in the Pilani company. The assessee valued the shares of the Gwalior Rayon and the Hind Cycles Ltd. at Rs. 10 and Rs. 125 per share, respectively, as per the resolution dt. 18th Nov., 1958, of the Pilani company declaring dividend. The ITO, Gwalior, however, took the view that the assessee's income from dividend from its shares in the Pilani company should be calculated taking the market value of the shares of the Gwalior Rayon and the Hind Cycles Ltd. on the date of the declaration of the dividend. On this calculation, the ITO added a sum of Rs. 37,515 to the dividend income declared by the assessee -company on its holdings in the Pilani company. The decision of the ITO was confirmed in appeal by the AAC and by the Tribunal.